YEAR 11 BUSINESS STUDIES VOCABULARY

Question 1

Advertising

Answer 1

A method of communicating information about the product; the business pays
for advertising time/space.

Question 2

Aim

Answer 2

The intention to reach a goal.

Question 3

Air pollution

Answer 3

The presence or introduction of harmful substances into the air causing disease,
allergies or damage to humans, animals, plants or the built environment.

Question 4

Asset

Answer 4

Something the business owns; it has a value.

Question 5

Average rate of return

Answer 5

The average profit for the year as a percentage of the original investment.
Average rate or return = average return per annum / initial × 100

Question 6

Boston matrix

Answer 6

A tool for analysing the contribution made by each product in a business’
product portfolio. It plots each product’s position according to its market share
and the rate of growth of the market.

Question 7

Brand image

Answer 7

The consumers’ perception of the brand; its character, qualities and
shortcomings. It is developed over time and operates as a consistent theme
through advertising campaigns.

Question 8

Break-even chart

Answer 8

A diagrammatic representation of the costs and revenue for a product; it plots
total costs against total sales revenue, showing the break-even point where they
cross.

Question 9

Break-even output

Answer 9

The point at which the business’ total sales equals the total costs. There is
neither profit nor loss.

Question 10

Buffer stock

Answer 10

A stock of raw materials held in reserve to protect the production process from
unforeseen shortages.

Question 11

Business plan

Answer 11

A detailed statement of how the business intends to operate, either at start-up
or during a given period of time. Business plans are based on forecasts and so
cover only a short time.

Question 12

Cash

Answer 12

Money that the business has in cash or at the bank.

Question 13

Cash flow forecast

Answer 13

A financial planning tool that estimates the money coming into and going out of
the business on a month-by-month basis; it allows the business to predict times
when additional finance may be needed to maintain liquidity.

Question 14

Cash inflow

Answer 14

Money received by the business from its operations or investments.

Question 15

Cash outflow

Answer 15

Money paid out by the business to fund its operations or investment activities.

Question 16

Centralisation

Answer 16

Maintaining control by keeping authority at the senior levels of the organisation.

Question 17

Chain of command

Answer 17

The line through the hierarchy that shows who is responsible for whom from top
to bottom of an organisation.

Question 18

Channels of distribution

Answer 18

The route the ownership of the product transfers from the seller to the buyer; it
may be a single transaction or pass through others such as wholesalers,
distributors, agents and retailers.

Question 19

Closing balance

Answer 19

The amount that remains in the account at the end of an accounting period.

Question 20

Closing balance

Answer 20

The amount that remains in the account at the end of an accounting period.

Question 21

Commission

Answer 21

An amount of money paid to an employee that is based on a percentage of the
sales he/she achieved; paid in addition to a basic salary.

Question 22

Competition

Answer 22

The rivalry between businesses looking to sell their goods/services in the same
market.

Question 23

Competitive pricing

Answer 23

Setting the price of a product so that it is in line with competitors’ prices.

Question 24

Consumer law

Answer 24

Laws designed to ensure that businesses make products that are safe and of
good quality, and that they deal with customers honestly and fairly.

Question 25

Consumer spending

Answer 25

The money spent by households on goods and services to satisfy their needs and wants.

Question 26

Contracts of employment

Answer 26

A legal document that sets out the terms and conditions of the job for the employer and the employee.

Question 27

Cost

Answer 27

The money spent by a business on goods and services.

Question 28

Cost-plus pricing

Answer 28

Setting the price of a good or service at an amount higher than the cost of producing it so that a profit is made.

Question 29

Customer

Answer 29

Individuals, businesses or organisations that purchase goods/services and make decisions about which supplier to choose.

Question 30

Customer engagement

Answer 30

The relationship between the business and the customer that puts the customer's requirements at the centre of the operation to build brand lovaltv.

Question 31

Customer loyalty

Answer 31

The likelihood that past customers will continue to buy from the business, enhanced by high quality customer service and/or reward programmes.

Question 32

Customer satisfaction

Answer 32

Whether customers are pleased with the goods/services they receive; whether they would purchase again.

Question 33

Decentralisation

Answer 33

Where authority is spread widely through the organisation.

Question 34

Delayering

Answer 34

The reorganisation of the organisation’s employees so that there are fewer levels of management.

Question 35

Delegation

Answer 35

Allocating a task to someone who would not normally be responsible for it.

Question 36

Demand

Answer 36

The quantity of a particular product that will be bought at particular price over a specific time.

Question 37

Directors

Answer 37

The people who are elected by the shareholders to run the business on their behalf.

Question 38

Diseconomies of scale

Answer 38

When a business grows too large, leading to a possible increase in unit cost.

Question 39

Disposal of waste

Answer 39

The removal, storage or destruction of unwanted material. Methods include recycling, burning and landfill sites.

Question 40

Dividend

Answer 40

A portion of the after-tax profit that is paid to shareholders according to the number of shares they own.

Question 41

E-commerce

Answer 41

Business transactions carried out electronically on the internet.

Question 42

Economies of scale

Answer 42

The cost advantage of producing on a large scale. As output increases the unit cost decrease

Question 43

Employees

Answer 43

Individuals who work full time or part time for the business; they have a contract of employment detailing their duties and rights.

Question 44

Employment law

Answer 44

Rulings that relate to the rights and responsibilities of people who work for a business; they affect the recruitment and selection process and how the business deals with its worker

Question 45

Enterprise

Answer 45

The ability to identify business ideas and opportunities to bring them to fruition and to take risks where appropriate

Question 46

Entrepreneu

Answer 46

A person who has the vision to use initiative to make business ideas happen, managing the resources and risks.

Question 47

Equality Act (2010)

Answer 47

Protects people from discrimination in the workplace and in wider society. It sets out the different ways in which it is unlawful to treat someone.

Question 48

Ethical objectives

Answer 48

A business’ goals that relate to fair business practice or moral guidelines and make a positive contribution to the business’ reputation.

Question 49

Ethics

Answer 49

The moral principles that guide how a business operates.

Question 50

Exchange rates

Answer 50

The price of one currency based on another or the cost of buying one currency from another, for example £1 = $1.2

Question 51

Expansion

Answer 51

Expansion

Question 52

Export

Answer 52

Good/service sold to a customer in another country.

Question 53

Extension strategies

Answer 53

Methods that can be used to prolong the life of a product; could include price reductions, modifications to the product or relaunch.

Question 54

External growth

Answer 54

The growth of a business by joining with another by merger or takeover.

Question 55

External sources of finance

Answer 55

Obtaining funds from sources that are not part of the business; possibilities include bank loan, mortgage, overdraft, additional partner or share issue.

Question 56

Factors of production

Answer 56

The elements that combine in the production process: land, labour, capital and enterpris

Question 57

Fixed costs

Answer 57

The costs that stay largely the same, regardless of the business’ output.

Question 58

Flat organisational structure

Answer 58

An organisational structure with a wide span of control and few levels of hierarchy (a short chain of command).

Question 59

Flow production

Answer 59

Using a production line to make goods continuously and in large numbers.

Question 60

Focus group

Answer 60

A small number of people from the target market brought together to discuss a particular product; produces qualitative data about their preferences and opinions.

Question 61

Franchising

Answer 61

The sale of the rights to use/sell a product by a franchisor to a franchisee. A fixed fee and/or a percentage is paid in return. The franchiser specifies the standards and provides training and support.

Question 62

Fringe benefits

Answer 62

Additional ‘perks’ that are in addition to a wage/salary; they are liable to income tax.

Question 63

Full time

Answer 63

Working all the usual hours required of an employee; usually 35 hours or more.

Question 64

Gap in the market

Answer 64

An opportunity for a new business (or expansion) which may meet a need that is not being met, or a group of potential customers who are not yet purchasing a particular good/service.

Question 65

Global warming

Answer 65

The steady increase in the earth’s temperature due to emissions and the build- up of greenhouse gases, resulting in climate changes.

Question 66

Globalisation

Answer 66

The trend for large businesses to operate on a worldwide scale; money, goods and services can be transferred across national borders.

Question 67

Goods

Answer 67

Items that are produced from raw materials for sale to businesses or consumers

Question 68

Government grants

Answer 68

Money available from the government to fund projects that it wants to support; the money is not repaid, but there are conditions and often progress reports are required.

Question 69

Growth

Answer 69

A business’ increase in size. Methods include: asset value, employees, market share, markets, profits and sales.

Question 70

Health and Safety at Work Act (1974)

Answer 70

Sets out the duties and responsibilities of both employers and employees for health and safety in the workplace.